NBFR provides partial downside protection on the Nasdaq-100 while capping your upside potential over a defined outcome period. Think of it as insurance that costs you gains instead of premiums — you'll lose less in moderate declines but miss out on big rallies.
How It Works
The fund uses a options collar strategy on the Nasdaq-100, buying puts to create a 10% buffer against losses while selling calls to fund that protection. The buffer resets annually on a specific date, and the cap on gains varies based on market conditions at reset. Between reset dates, your actual buffer and cap depend on when you bought in and where the market has moved since.
Key Features
- First 10% of losses absorbed if held through full outcome period, protecting against garden-variety corrections
- No expense ratio charged — you pay through the capped upside instead of annual fees
- Provides tech exposure with training wheels, unlike standard QQQ which can drop 30%+ in bad years
Risks
- Losses beyond 10% hit you dollar-for-dollar — a 25% crash still means you're down 15%
- Upside caps can be painfully low (often 10-15% annually) when volatility is high at reset
- Mid-period buyers inherit a deteriorating buffer and lower remaining cap — timing matters significantly
Who Should Own This
Best for nervous tech investors who want Nasdaq exposure but can't stomach the full volatility — particularly those nearing retirement or with shorter time horizons. Also works for tactical allocators who expect choppy markets ahead. Skip this if you're young, have a decade-plus timeline, or believe tech will rip higher.